Trapped by Success:
How Benefits Cliffs Undermine Economic Mobility for Single Mothers
October 2025
Doug Mollett, Economic Mobility Manager
Simon Wang, Economic Mobility Specialist
Manan Shah, Policy Advisor
Joseph Dean, Junior Racial Economic Research Specialist
Introduction
The National Community Reinvestment Coalition (NCRC) recently partnered with Share Our Strength to enhance the work of six community-based NCRC member organizations that are supporting single mothers through their unique workforce development, housing, small business and financial literacy programming. The six organizations are located across the following states: Florida, Louisiana, Mississippi, Ohio, Virginia and California. Over the past three years, NCRC has worked with these organizations via regular site visits, intentional convenings and technical assistance assessments to identify current problems and potential solutions facing single mothers attaining economic stability.
One of the major challenges that was identified was the benefits cliff, which is when an individual’s increase in their annual earned income can trigger the loss of important social assistance benefits, such as the Temporary Assistance for Needy Families program (TANF) and the Supplemental Nutrition Assistance Program (SNAP).
The loss of benefits can make it difficult for single mothers to support their households, leading them to compromise their financial security to retain their social assistance.
Through research analysis and direct engagement with our members, NCRC has developed key lessons and policy recommendations that could help reform the current benefits structure and offer single-parent households a concrete pathway towards economic mobility.
How Benefits Cliffs Trap Single Parents
Single parents face some of the most persistent barriers to economic mobility in the United States. With only one income to support an entire household, they stretch limited resources across housing, transportation, child care and food expenses.
These issues affect many single parents and low-wage workers without children. However, women of color are especially impacted by the benefits cliff. Women of color are more likely to be single heads of household and are more likely to live in neighborhoods with fewer high-quality jobs, limited transportation and higher housing costs. Black women renters, for example, are the most likely group to be housing cost-burdened, with 60% spending at least one-third of their income on housing. The result is that many single mothers are more likely to be cost-burdened and often have no choice but to rely on public benefits to get by.
Federal policy has long treated public benefits as conditional and tied to work requirements. While these programs are intended to support families, their design often reflects outdated assumptions about work instead of addressing the structural barriers that hold families back. High child care costs, limited affordable housing and stagnant wages are everyday realities for Single mothers households. Yet, benefits programs frequently penalize parents for modest income gains or for failure to account for the costs of raising children alone. Benefits should be structured as bridges to economic stability and mobility rather than barriers to progress.
The benefits cliff occurs when a small increase in income results in a much larger loss of benefits, leaving families financially worse off than before. Our analysis shows that these cliffs most often appear at the income thresholds for the Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP) programs, with losses often totaling thousands of dollars. The cliff is especially steep when child care deductions are factored in because they temporarily increase financial support to eligible families but make the eventual drop-off more severe. These findings highlight the need for reforms, such as gradual phase-outs, income and asset disregards, better alignment across programs and policies that allow families to build savings while still receiving assistance.
The Federal Reserve’s community development arm (Fed Communities) outlined real-world examples of the benefits cliff in action against single mothers. A mother of two receives a $0.10/hour raise.This $200 increase in annual income caused her to lose the $9,000/year she was receiving in child care subsidies. In another scenario, a mother of four relies on SNAP benefits to feed herself and her children. She receives a promotion at her job and earns an additional $1/hour. This additional $160/month makes her ineligible for SNAP, with the mother losing $800/month in assistance. These examples show the counterintuitive positions current policies put low-wage workers into – turning a raise or a promotion into reductions in their overall income – and reveal the disjointed nature of the economic ladder in the United States.
Unfortunately, the experiences of these women are not isolated. In fact, recent research from Washington University in St. Louis’ Center for Social Development suggests they are quite common. They found that out of the 40 million low-wage workers across the United States who receive public benefits, approximately 1 in 5 have had some sort of experience with the benefits cliff. Although these estimates do not speak directly to the experiences of single parents alone, another study from Oxfam indicates single parents are more likely to be low-wage workers, with 42% of working single parents making less than $17 an hour compared to 12% of partnered parents.
The financial and caregiving responsibilities single mothers face place them at unique risk. They are nearly twice as likely as single fathers to experience poverty, with 28% of single mothers living in poverty compared to 15% of single fathers. They also remain concentrated in low-wage jobs with little opportunity for advancement. Child care stands out as the most pressing financial barrier, with costs that are unaffordable in many states and limited provider availability in others. These realities show that the benefits cliff is not only about income thresholds, but also about systemic failures in how we support families. The US Department of Health and Human Services (HHS) set a child care affordability benchmark of 7% of a family or individual’s household income. Recent studies have shown that single-parent households spend an average of 24% of their income on center-based child care, more than triple the HHS benchmark.
This report examines six states that reflect both high- and low-performing environments for single parent economic mobility. Using the Atlanta Federal Reserve’s Policy Rules Database, we modeled benefits eligibility for a single adult with two children in each state. The results demonstrate where cliffs emerge, how they interact with wages and child care costs and how they influence household decisions. These findings are paired with policy recommendations and strategies that practitioners can use to reduce cliffs and strengthen the economic stability of families.
Our goal is clear: Families should not be penalized for striving to get ahead. Public benefits must provide stability while parents pursue long-term opportunities. By centering single mothers in this analysis, we highlight both the urgent need for reform and the potential for solutions that benefit all low-income families by building a safety net that functions as a true bridge to opportunity.
Brief Overview of TANF and SNAP
There are several public benefits and tax credit programs intended to support low-income workers. Two of the most notable being the Temporary Assistance for Need Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP) programs. Both are cash assistance programs, meaning beneficiaries receive direct payments from the federal government. There is also a broader patchwork of safety net programs, including the Child Care and Development Fund (CCDF), the Housing Choice Voucher Program, the Low-Income Home Energy Assistance Program (LIHEAP) and the Medicaid/Children’s Health Insurance Program (CHIP). Together, these programs are often critical” instead of towards helping working families make ends meet from month-to-month.
Here, we choose to focus on the cash assistance program SNAP due to methodological constraints and the more straightforward interpretation of their effect on families’ balance sheets. Qualifying for any of these programs requires people to go through a confusing maze of paperwork and interviews for each individual program. For working families with jobs and children, the administrative burden and disconnect between agencies imposes additional time and energy constraints.
Despite similarities in their direct impact on families’ budgets, TANF and SNAP are distinct programs and differ significantly in their respective designs. While states are responsible for setting income eligibility thresholds for TANF, SNAP eligibility is generally set at the federal level. This means that eligibility is not always aligned between programs, which can further complicate families’ financial planning and lead to repeated benefits cliffs as they move up the income ladder and past the program’s income limits.
Eligibility is not only about determining who is allowed to receive assistance and how much for a given income, but also determining what counts as income. Employers deduct some of what you earn from your income to pay Social Security taxes to the federal government, with whatever is leftover being the number you see on your paystub. Adding up all of those lines on all of those paychecks at the end of the year yields a person’s gross annual income, which is the number reported to the Internal Revenue Service every spring during tax season.
However, a person’s gross annual income is not always the number used to determine eligibility for SNAP or TANF because states can offer exemptions and deductions to families for expenses like child care, housing and transportation. Deductions are intended to account for necessary expenses and ensure public benefits help support families beyond just the bare necessities needed to survive. After verifying an applicant’s gross annual income and accounting for all applicable deductions, this net income is then used to determine eligibility for public benefits programs such as SNAP and TANF.
Key findings of state-level analyses
To better understand the SNAP benefits cliff, we deployed the Policy Rules Database model from the Atlanta Federal Reserve. To simulate the challenges a single mother would face dealing with the SNAP benefits cliff, we used a three-person household with two children as our family unit of measurement.
All six of the states highlighted in this analysis structure SNAP differently. While all six share the same maximum benefit amount, they differ in their gross eligibility thresholds, or the point at which a household’s income makes them ineligible for benefits. Because of these differences, the starting point and steepness of the SNAP benefits cliff varies by state. Without accounting for deductions (other than the 20% deduction of earned income and standard household deduction), SNAP benefits taper off as intended with a small cliff at the eligibility threshold point. It is with the introduction of deductions, particularly the childcare deductions, that the cliff widens dramatically. Child care costs are deducted from a family’s net income, which raises the SNAP benefit amount. This larger benefit comes later as overall income rises, but also results in a larger benefits cliff.
Figure 1 below shows the SNAP benefits cliff with all deductions, including child care expenses. Ohio has the most dramatic cliff with no phaseout rate and an abrupt benefits cut-off around 129% of the federal poverty level. A $1 increase over this point leads to a reduction of over $8,000 in benefits to a family of three.
Figure 1
However, Florida has virtually no benefits cliff. In the Sunshine State, SNAP benefits are phased out in a way that doesn’t subject families to a dramatic drop in benefits. While California and Virginia have large benefits cliffs, the threshold is 200% of the federal poverty level, significantly higher than in states that utilize other policy levers for altering eligibility criteria.
Figure 2 below shows how the SNAP benefits cliff would look without child care cost deductions:
Figure 2
The cliff would become significantly smaller across all six states, indicating that policies should be implemented to ensure that child care costs can be deducted without increasing the benefits cliff for families.
Policy Recommendations
Public benefits should provide stability for families and help them move toward long-term opportunities for economic mobility. Unfortunately, too often they trap single parents in cycles of poverty. Small raises or extra hours can cost them thousands of dollars in lost support, forcing them to make impossible choices that risk the general well-being of themselves and their families.
Unfortunately, the landscape of public benefits is marred by uncertainty at the federal level. The priorities of Congress and the current presidential administration have shifted even further away from good faith efforts to correct the benefits cliffs and establish a well-functioning, robust social safety net. Instead, recent changes at the federal level have aimed to dismantle public benefits programs. With the passage of H.R. 1 – frequently referred to as the One Big Beautiful Bill (OBBB) – these programs will get worse before they get better.
OBBB includes historic changes to the SNAP and Medicaid programs that will increase the share of costs placed onto states, alter eligibility criteria and extend work requirements to more people. Public assistance programs like SNAP and TANF provide necessary assistance to millions of people every year. These changes alter the fabric of our social contract, reversing years of broad bipartisan agreement that those who are struggling deserve access to public benefits programs. Make no mistake: The changes made via the OBBB will set our fight for a just economy back years if not decades.
Among the six states represented in the analysis at the center of this report are some of the highest SNAP participant populations in the nation. Namely, California had approximately 5.5 million people participating in the program and Florida had nearly 3 million participants as of May 2025. H.R. 1 makes significant changes to the way SNAP is funded that will have major implications for both state governments and those currently relying on SNAP benefits to get by.
Historically, the federal government has covered 100 percent of the costs of food benefits and shared the cost of administrative expenses equally with states. However, under the new cost-share framework for food benefits, states will be required to match part of the cost of those benefits based on their payment error rates. A payment error rate is a measure of how accurately states determine who is eligible and their subsequent benefit allotments. Beginning in fiscal year (FY) 2028, states with payment error rates at or above 6 percent in FY2026 will face new cost obligations as follows:
- Below 6 percent error rate: 0 percent match (many states have hovered near or above 6 percent)
- 6 percent–8 percent: 5 percent match
- 8 percent–10 percent: 10 percent match
- Over 10 percent: 15 percent match
Based on FY2024 payment error rates, California, Florida, Mississippi and Virginia would all face the steepest 15 percent matching requirements, Ohio would face a 10 percent matching requirement and Louisiana would face a 5 percent match.
In addition to the new cost-sharing framework for benefits, states will now be responsible for 75 percent of their administrative costs rather than 50 percent beginning in FY2027, marking a significant departure from the historical precedent. The reduced federal support and higher operational costs will likely make it more difficult for states to maintain low error rates or reduce high error rates, pushing states into higher cost-sharing brackets over time and further straining state budgets.
Amidst the changes, there may be room for new opportunities. While the most significant SNAP cuts under H.R. 1 will not begin until after the 2026 midterm elections, state legislatures have already started planning accordingly. As states alter their programs to comply with the impending legislation, we encourage practitioners to make their voices heard and advocate for changes that can simultaneously strengthen the public benefits infrastructure in their communities. Recognizing the lack of political will at the federal level, the recommendations below outline changes within the purview of state legislatures that practitioners and community leaders can advocate for to reduce benefit cliffs and create a safety net system that truly supports lower-income, single parents.
Create Opportunities for Families to Save
The ability to save is central to obtaining financial stability. Yet, in many states, families are penalized for building even modest assets. Single parents risk losing benefits if they keep a reliable car, set aside money for emergencies or save for a child’s education. These asset limits are outdated and harmful. They reinforce a cycle where families are forced to spend down any savings just to keep their public benefits, leaving them unprepared for a potential crisis.
States should revise or eliminate asset tests so families can save without fear of losing assistance. At the same time, they should expand tools that actively encourage saving. Individual Development Accounts (IDAs) are one proven model that allows families to match their savings towards goals like homeownership, education or small business investment. Escrow accounts tied to housing programs are another proven model, giving families a way to accumulate savings as their income grows instead of seeing their benefits cut immediately.
When families can save, they can start to plan for their futures. Savings allow parents to cover an unexpected medical bill, repair their car or put down a deposit on their own housing. Without this flexibility, families remain trapped in a vicious paycheck to paycheck cycle. Encouraging asset development is not just good policy; it is a prerequisite for real economic mobility.
Align Program Rules and Expand Eligibility
The patchwork of rules across programs like TANF and SNAP creates confusion and instability for families. A single parent might lose TANF before they qualify for SNAP, or face a sharp cutoff point in one program while another continues. These gaps create compounding cliffs that make it impossible to plan or budget reliably. Instead of serving as a coordinated system of support, benefits often look like an inescapable maze for those trying to navigate them.
States can change this by aligning eligibility rules across programs and extending transitional benefits. Broad-Based Categorical Eligibility (BBCE) is one tool that simplifies the access barriers by making TANF participants automatically eligible for SNAP and allowing states to increase eligibility limits for SNAP. States should go further by building transitional supports into their program design. Missouri’s model of gradually reducing benefits by 20 percent as income rises is one example of how families can be eased off assistance instead of pushed over a cliff. Policies like these reduce churn, improve family stability and give single parents the time they need to adjust as their incomes increase. Indiana is another example of a state implementing innovative approaches to retaining eligibility. In Indiana, the first $15,000 in additional earned income is disregarded when considering eligibility for certain benefit programs.
Aligning programs and extending support is not only about fairness; it is about efficiency. When families churn in and out of programs, administrative costs rise and children’s stability is disrupted. Better alignment reduces paperwork, improves outcomes and gives families a clear path forward toward economic stability.
Align Benefits & Eligibility with Real Costs of Living
The federal poverty level does not reflect what families actually need to survive in most communities. A family earning just above the official threshold is often still unable to cover housing, child care, transportation and food costs. Yet, benefits are often cut off long before wages reach a level that can support those costs. For single mothers, this means being pushed off assistance while still unable to meet their family’s basic needs.
States should adopt self-sufficiency standards that measure what it truly costs to live in a given community. These standards take into account actual housing prices, child care rates, transportation costs and healthcare expenses. Basing eligibility on real costs would prevent families from losing benefits too early and give them the time to reach genuine stability before their public benefits end.
This change is critical for creating a benefits system that reflects lived realities rather than outdated formulas. When eligibility is tied to real costs, mothers will be able to accept pay raises, work more hours or take higher-paying jobs without the fear that doing so will cut off the support keeping them afloat. It would also give policymakers clearer benchmarks for designing programs that align with economic realities rather than abstract thresholds.
Correct the Child Care Cliff
Child care affordability is the single greatest barrier to long-term employment for single parents. Single parents who cannot afford exorbitant child care costs often struggle to hold a job or are unable to work extra hours. Pursuing educational opportunities or workforce training programs to improve their economic standing would also be challenging. The current design of child care deductions only deepens the problem.
Families can deduct child care expenses when applying for SNAP, which raises the amount of support they receive. However, it also creates a larger drop-off in benefits when they are no longer eligible. Instead of rewarding work, the system penalizes single parents who obtain employment. Parents know that earning a little more could mean losing their child care subsidy entirely, leaving them to possibly forego job opportunities that could create a pathway to economic mobility.
The solution is straightforward: States should phase out child care assistance gradually so that support tapers as income grows. Transitional child care policies would let parents keep their affordable child care while they stabilize their finances and plan for the future. This would reduce the pressure to turn down raises or avoid full-time work, giving families a real chance to advance. Without a fix to the child care cliff, the rest of the social safety net system will reinforce current economic inequities.
Conclusion
Throughout this report, we have covered the key findings from models showing the extent of the benefits cliff in six states — Florida, Louisiana, Mississippi, Ohio, Virginia and California. Additionally, we have described how benefits cliffs are a policy choice and how actionable policy positions proposed in this report can assist community-based organizations better advocate for the reduction and elimination of the benefits cliff conundrum for those they serve.
As we all adapt to this new federal environment, NCRC also invites you to join in our efforts to make economic justice a national priority and a local reality. Recent cuts to federal grants have impacted many of the organizations on the frontlines serving communities impacted by disinvestment and poverty, including many families who will lose public benefits as a result of this legislation. The path forward requires us all to lean into our partnerships, collaborate with one another and find creative ways to continue our work supporting single parents, children and the most vulnerable in our country. Despite the setbacks, this work remains crucial and even more important.
Appendix: Methods and Data
The benefits cliff model follows the method laid out by the Atlanta Federal Reserve’s Policy Rules Database. The model is a system of equations that estimates the amount of benefits households receive based on given inputs, such as income and household size. Some of the benefits the model calculates are SNAP, TANF, Medicaid, state child care subsidies, EITC and state EITC.
The model allows for various programs to intersect. For example, child care expense subsidies are used to calculate SNAP benefits. Policy proposals, such as raising the eligibility threshold, increasing the maximum benefits and changes to how benefits are calculated can be modelled in alignment with the flexibility of the model.
The model uses the FY2024 guidelines for the public benefits included. Because the model does not distinguish between the sex of the parents, a household unit of three with two children (ages 3 and 8) was used in the analysis. SNAP has special eligibility provisions for households where one of the members is disabled. Therefore, none of the household members in the model is disabled.
Figure 3 below shows the eligibility thresholds and the utility deduction for a household of three:
Figure 3
Some public assistance programs are designed to provide certain services free of charge or at a reduced rate. SNAP takes into account child care, housing and utility costs when calculating benefit amounts and determining eligibility. The model uses the Minimum Household Budget to estimate the market cost of these expenses.
The Minimum Household Budget is the minimum cost of these essential expenses necessary for day-to-day living. It is based on the United for ALICE Survival Budget, with ALICE standing for Asset-Limited, Income-Constrained and Employed. The budget includes housing, child care, food, transportation, health care and a contingency fund equal to 10% of the household budget. The budget is calculated for every county and household type in the country. Designed to address the shortcomings of the federal poverty level, ALICE seeks a more comprehensive estimate of poverty nationwide.
The annual household expenditures used for this analysis are broken down by state in Figure 4 below:
Figure 4
Acknowledgements
NCRC would like to thank Share Our Strength for supporting this work as a financial and thought partner. For nearly three years, six community-based organizations engaged with NCRC to inform practical strategies, approaches and solutions towards effectively serving single mothers attain economic mobility. Without their community-driven expertise, NCRC could not have provided them with the appropriate training and technical assistance to support their programming. NCRC extends its thanks to:
- Women’s Economic Ventures (Santa Barbara, CA)
- Catalyst Miami (Miami, FL)
- Habitat for Humanity-St. Tammany West (Mandeville, LA)
- Voice of Calvary Ministries (Jackson, MS)
- Easterseals Redwood (Cincinnati, OH)
- Piedmont Housing Alliance (Charlottesville, VA)
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